1 year ago
what was the principle method of financing railroad construction in late nineteenth-century in Texas
Asked by Anonymous
A great resource is the Texas State Historical Association Online Handbook of Texas, and among my first “go to” resources. Here’s the article on railroads: http://www.tshaonline.org/handbook/online/articles/eqr01
Here’s a paragraph that may answer the question:
There was insufficient local capital in Texas to finance the early railroads, and eastern and foreign capitalists were hesitant about investing in a frontier state. Incentives were necessary and took three major forms. Between 1850 and 1876, when the practice was prohibited by the Constitution, individual cities and counties issued about $2.4 million in bonds to aid railroad construction. The state, however, provided the major incentives in the form of land grants and loans. Six of the antebellum railroads borrowed $1,816,500 from the Special School Fund at the rate of $6,000 per mile of track. The railroads repaid $4,172,965 in principal and interest. Only one of the carriers, the Houston Tap and Brazoria, defaulted, and the state was able to recover some of the debt by foreclosing and selling the railroad.